##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from      to
 Commission File No. 001-34005
 
 Lender Processing Services, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    26-1547801(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)601 Riverside AvenueJacksonville, Florida
    
    32204(Address of principal executive offices)
    
    (Zip Code)
 (904) 854-5100  (Registrants telephone number, including area code)
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




---



##### 



PagePart I: FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (Unaudited).Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Earnings for the three and nine months ended September 30, 2009 and 2008
    
    
    4Consolidated Statements of Comprehensive Earnings for the three and nine months ended September 30, 2009 and 2008
    
    
    5Consolidated Statement of Equity for the nine months ended September 30, 2009
    
    
    6Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2009 and 2008
    
    
    7Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
    
    36Item 4. Controls and Procedures.
    
    
    36Part II: OTHER INFORMATIONItem 1. Legal Proceedings.
    
    
    37Item 1A. Risk Factors.
    
    
    38Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    39Item 6. Exhibits.
    
    
    39EX-31.1EX-31.2EX-32.1EX-32.2
 2




---



##### Table of Contents



Part I: FINANCIAL INFORMATION
 
 Item 1.
    
    Consolidated Financial Statements (Unaudited).
 LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets
(Unaudited)
 September
    
    
    December30, 2009
    
    
    31, 2008 (1)(In thousands)ASSETSCurrent assets:
    
    $
    64,847
    
    
    $
    125,966Cash and cash equivalentsTrade receivables, net of allowance for doubtful accounts of $32.1 million and $27.2 million, respectively
    
    
    428,373
    
    
    
    344,848Other receivables
    
    
    4,086
    
    
    
    17,393Due from affiliates
    
    
    
    
    
    
    2,713Prepaid expenses and other current assets
    
    
    24,939
    
    
    
    22,030Deferred income taxes, net
    
    
    40,757
    
    
    
    40,757Total current assets
    
    
    563,002
    
    
    
    553,707Property and equipment, net of accumulated depreciation of $142.6 million and $142.4 million, respectively
    
    
    103,711
    
    
    
    95,542Computer software, net of accumulated amortization of $113.1 million and $87.8 million, respectively
    
    
    180,064
    
    
    
    157,539Other
intangible assets, net of accumulated amortization of $296.8 million and $273.7 million, respectively
    
    
    78,656
    
    
    
    83,489Goodwill
    
    
    1,135,153
    
    
    
    1,091,056Other non-current assets
    
    
    109,105
    
    
    
    122,300Total assets
    
    $
    2,169,691
    
    
    $
    2,103,633LIABILITIES AND EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    77,362
    
    
    $
    145,101Trade accounts payable
    
    
    40,857
    
    
    
    31,720Accrued salaries and benefits
    
    
    51,593
    
    
    
    36,492Recording and transfer tax liabilities
    
    
    17,446
    
    
    
    14,639Due to affiliates
    
    
    1,492
    
    
    
    1,573Other accrued liabilities
    
    
    154,878
    
    
    
    101,612Deferred revenues
    
    
    49,572
    
    
    
    51,628Total current liabilities
    
    
    393,200
    
    
    
    382,765Deferred revenues
    
    
    40,474
    
    
    
    40,343Deferred income taxes, net
    
    
    30,504
    
    
    
    36,557Long-term debt, net of current portion
    
    
    1,286,030
    
    
    
    1,402,350Other non-current liabilities
    
    
    27,926
    
    
    
    39,217Total liabilities
    
    
    1,778,134
    
    
    
    1,901,232Commitments and contingencies (note 8)Equity:Lender Processing Services, Inc. stockholders equity:Preferred stock $0.0001 par value; 50 million shares authorized, none issued at September 30, 2009 and
December 31, 2008, respectively
    
    
    
    
    
    
    Common stock $0.0001 par value; 500 million shares authorized, 96.8 million and 95.3 million shares issued
at September 30, 2009 and December 31, 2008, respectively
    
    
    10
    
    
    
    9Additional paid-in capital
    
    
    157,103
    
    
    
    111,849Retained earnings
    
    
    265,645
    
    
    
    93,540Accumulated other comprehensive loss
    
    
    (9,617
    )
    
    
    (13,667
    )Treasury stock $0.0001 par value; 884,734 and 19,870 shares at September 30, 2009 and December 31, 2008,
respectively, at cost
    
    
    (27,712
    )
    
    
    (582
    )Total Lender Processing Services, Inc. stockholders equity
    
    
    385,429
    
    
    
    191,149Noncontrolling minority interest
    
    
    6,128
    
    
    
    11,252Total equity
    
    
    391,557
    
    
    
    202,401Total liabilities and equity
    
    $
    2,169,691
    
    
    $
    2,103,633
 
 (1)
    
    Derived from audited consolidated financial statements.  3




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Earnings
(Unaudited)
 Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except per share data)Processing and services revenues (note 3)
    
    $
    619,427
    
    
    $
    466,762
    
    
    $
    1,762,415
    
    
    $
    1,363,669Cost of revenues (note 3)
    
    
    409,113
    
    
    
    300,560
    
    
    
    1,167,829
    
    
    
    882,410Gross profit
    
    
    210,314
    
    
    
    166,202
    
    
    
    594,586
    
    
    
    481,259Selling, general, and administrative expenses (note 3)
    
    
    66,671
    
    
    
    57,909
    
    
    
    203,280
    
    
    
    171,577Operating income
    
    
    143,643
    
    
    
    108,293
    
    
    
    391,306
    
    
    
    309,682Other income (expense):Interest income
    
    
    283
    
    
    
    476
    
    
    
    1,249
    
    
    
    1,039Interest expense
    
    
    (21,195
    )
    
    
    (24,565
    )
    
    
    (64,734
    )
    
    
    (24,621
    )Other expense, net
    
    
    (203
    )
    
    
    (5
    )
    
    
    (217
    )
    
    
    277Total other income (expense)
    
    
    (21,115
    )
    
    
    (24,094
    )
    
    
    (63,702
    )
    
    
    (23,305
    )Earnings from continuing operations before income taxes and
equity in losses of unconsolidated entity
    
    
    122,528
    
    
    
    84,199
    
    
    
    327,604
    
    
    
    286,377Provision for income taxes
    
    
    46,867
    
    
    
    32,669
    
    
    
    125,308
    
    
    
    111,114Earnings from continuing operations before equity in losses of
unconsolidated entity
    
    
    75,661
    
    
    
    51,530
    
    
    
    202,296
    
    
    
    175,263Equity in losses of unconsolidated entity
    
    
    
    
    
    
    (1,484
    )
    
    
    (37
    )
    
    
    (3,854
    )Earnings from continuing operations
    
    
    75,661
    
    
    
    50,046
    
    
    
    202,259
    
    
    
    171,409Discontinued operation, net of tax
    
    
    
    
    
    
    1,565
    
    
    
    (504
    )
    
    
    6,203Net earnings
    
    
    75,661
    
    
    
    51,611
    
    
    
    201,755
    
    
    
    177,612Net income attributable to noncontrolling minority interest
    
    
    (119
    )
    
    
    (330
    )
    
    
    (927
    )
    
    
    (1,053
    )Net earnings attributable to Lender Processing Services, Inc.
    
    $
    75,542
    
    
    $
    51,281
    
    
    $
    200,828
    
    
    $
    176,559Amounts attributable to Lender Processing Services, Inc.:Earnings from continuing operations, net of tax
    
    $
    75,542
    
    
    $
    49,716
    
    
    $
    201,332
    
    
    $
    170,356Discontinued operation, net of tax
    
    
    
    
    
    
    1,565
    
    
    
    (504
    )
    
    
    6,203Net earnings
    
    $
    75,542
    
    
    $
    51,281
    
    
    $
    200,828
    
    
    $
    176,559Net earnings per share  basic from continuing operations
    
    $
    0.79
    
    
    $
    0.52
    
    
    $
    2.11
    
    
    $
    1.78Net earnings per share  basic from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.07Net earnings per share  basic
    
    $
    0.79
    
    
    $
    0.54
    
    
    $
    2.11
    
    
    $
    1.85Weighted average shares outstanding  basic (1)
    
    
    95,996
    
    
    
    94,667
    
    
    
    95,557
    
    
    
    95,551Net earnings per share  diluted from continuing operations
    
    $
    0.78
    
    
    $
    0.52
    
    
    $
    2.09
    
    
    $
    1.77Net earnings per share  diluted from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.07Net earnings per share  diluted
    
    $
    0.78
    
    
    $
    0.54
    
    
    $
    2.09
    
    
    $
    1.84Weighted average shares outstanding  diluted (1)
    
    
    96,399
    
    
    
    95,223
    
    
    
    95,941
    
    
    
    95,963
 
 (1)
    
    Weighted average shares outstanding data for the three and nine months ended September 30,
2008 is reflected on a pro forma basis (as discussed in note 4).  4




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Comprehensive Earnings
(Unaudited)
 Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands)Net earnings attributable to Lender Processing Services, Inc.
    
    $
    75,542
    
    
    $
    51,281
    
    
    $
    200,828
    
    
    $
    176,559Other comprehensive earnings:Unrealized gain (loss) on other investments, net of tax
    
    
    158
    
    
    
    (111
    )
    
    
    188
    
    
    
    139Unrealized gain (loss) on interest rate swaps, net of tax
    
    
    1,034
    
    
    
    (104
    )
    
    
    3,862
    
    
    
    (104
    )Other comprehensive earnings
    
    
    1,192
    
    
    
    (215
    )
    
    
    4,050
    
    
    
    35Comprehensive earnings attributable to Lender Processing Services, Inc.
    
    $
    76,734
    
    
    $
    51,066
    
    
    $
    204,878
    
    
    $
    176,594
  5




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
 
 Consolidated Statement of Equity
(Unaudited)
 Lender Processing Services, Inc. Stockholders EquityAdditional
    
    
    
    
    
    
    Accumulated Other
    
    
    
    
    
    
    
    
    
    
    NoncontrollingCommon
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Treasury
    
    
    Minority
    
    
    TotalShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Earnings (Loss)
    
    
    Shares
    
    
    Stock
    
    
    Interest
    
    
    Equity(In thousands)Balances, December 31, 2008
    
    
    95,284
    
    
    $
    9
    
    
    $
    111,849
    
    
    $
    93,540
    
    
    $
    (13,667
    )
    
    
    (20
    )
    
    $
    (582
    )
    
    $
    11,252
    
    
    $
    202,401Net distribution to FIS
    
    
    
    
    
    
    
    
    
    
    (434
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (434
    )Net earnings attributable to
Lender Processing Services, Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,828
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,828Net earnings attributable to
noncontrolling minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    927
    
    
    
    927Acquisition of noncontrolling
minority interest
    
    
    
    
    
    
    
    
    
    
    3,451
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,051
    )
    
    
    (2,600
    )Dividends paid (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,723
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,723
    )Exercise of stock options and
restricted stock vesting
    
    
    1,545
    
    
    
    1
    
    
    
    19,248
    
    
    
    
    
    
    
    
    
    
    
    (565
    )
    
    
    (17,247
    )
    
    
    
    
    
    
    2,002Tax benefit associated with equity
compensation
    
    
    
    
    
    
    
    
    
    
    2,625
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,625Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    20,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,364Treasury stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (300
    )
    
    
    (9,883
    )
    
    
    
    
    
    
    (9,883
    )Unrealized gain on investments, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188Unrealized gain on interest rate
swaps, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,862
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,862Balances, September 30, 2009
    
    
    96,829
    
    
    $
    10
    
    
    $
    157,103
    
    
    $
    265,645
    
    
    $
    (9,617
    )
    
    
    (885
    )
    
    $
    (27,712
    )
    
    $
    6,128
    
    
    $
    391,557
 
 (1)
    
    Dividends were paid at $0.10 per common share on March 10, June 10 and September 11, 2009.  6




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
(Unaudited)
 Nine months ended September 30,2009
    
    
    2008(In thousands)Cash flows from operating activities:Net earnings attributable to Lender Processing Services, Inc.
    
    $
    200,828
    
    
    $
    176,559Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization
    
    
    72,623
    
    
    
    68,395Amortization of debt issuance costs
    
    
    3,968
    
    
    
    1,509Gain on sale of discontinued operation
    
    
    (2,574
    )
    
    
    Deferred income taxes, net
    
    
    (651
    )
    
    
    3,968Stock-based compensation
    
    
    20,364
    
    
    
    14,910Tax benefit associated with equity compensation
    
    
    (2,625
    )
    
    
    (512
    )Equity in losses of unconsolidated entity
    
    
    37
    
    
    
    3,854Noncontrolling minority interest
    
    
    927
    
    
    
    1,053Changes in assets and liabilities, net of effects of acquisitions:Trade receivables
    
    
    (76,642
    )
    
    
    (84,167
    )Other receivables
    
    
    13,321
    
    
    
    (7,612
    )Prepaid expenses and other assets
    
    
    (7,798
    )
    
    
    4,676Deferred revenues
    
    
    (2,922
    )
    
    
    5,342Accounts payable and other liabilities
    
    
    76,281
    
    
    
    59,317Net cash provided by operating activities
    
    
    295,137
    
    
    
    247,292Cash flows from investing activities:Additions to property and equipment
    
    
    (24,896
    )
    
    
    (14,657
    )Additions to capitalized software
    
    
    (42,966
    )
    
    
    (23,685
    )Acquisition of title plants
    
    
    (14,319
    )
    
    
    Acquisitions, net of cash acquired
    
    
    (16,403
    )
    
    
    (15,488
    )Proceeds from sale of discontinued operation, net of cash distributed
    
    
    (32,638
    )
    
    
    Net cash used in investing activities
    
    
    (131,222
    )
    
    
    (53,830
    )Cash flows from financing activities:Borrowings
    
    
    
    
    
    
    25,700Debt service payments
    
    
    (180,455
    )
    
    
    (61,993
    )Capitalized debt issuance costs
    
    
    
    
    
    
    (24,882
    )Stock options exercised
    
    
    2,002
    
    
    
    1,433Tax benefit associated with equity compensation
    
    
    2,625
    
    
    
    512Dividends paid
    
    
    (28,723
    )
    
    
    (9,526
    )Treasury stock repurchases
    
    
    (9,883
    )
    
    
    Bond repurchases
    
    
    (8,000
    )
    
    
    Acquisition of noncontrolling minority interest
    
    
    (2,600
    )
    
    
    Net distributions to FIS
    
    
    
    
    
    
    (114,855
    )Net cash used in financing activities
    
    
    (225,034
    )
    
    
    (183,611
    )Net (decrease) increase in cash and cash equivalents
    
    
    (61,119
    )
    
    
    9,851Cash and cash equivalents, beginning of period
    
    
    125,966
    
    
    
    39,566Cash and cash equivalents, end of period
    
    $
    64,847
    
    
    $
    49,417Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    69,882
    
    
    $
    15,543Cash paid for taxes
    
    $
    107,709
    
    
    $
    720Non-cash contribution of stock compensation by FIS
    
    $
    
    
    
    $
    9,120Non-cash redistribution of assets to FIS
    
    $
    434
    
    
    $
    (4,537
    )Non-cash exchange of FIS note
    
    $
    
    
    
    $
    (1,585,000
    )Non-cash consideration received from sale of discontinued operation
    
    $
    40,310
    
    
    $
    Non-cash consideration issued in acquisition of business
    
    $
    (5,162
    )
    
    $
    
  7




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 Except as otherwise indicated or unless the context otherwise requires, all references to
LPS, we, the Company, or the registrant are to Lender Processing Services, Inc., a Delaware
corporation that was incorporated in December 2007 as a wholly-owned subsidiary of FIS, and its
subsidiaries; all references to FIS, the former parent, or the holding company are to
Fidelity National Information Services, Inc., a Georgia corporation formerly known as Certegy Inc.,
and its subsidiaries, that owned all of LPSs shares until July 2, 2008; all references to former
FIS are to Fidelity National Information Services, Inc., a Delaware corporation, and its
subsidiaries, prior to the Certegy merger described below; all references to old FNF are to
Fidelity National Financial, Inc., a Delaware corporation that owned a majority of former FISs
shares through November 9, 2006; and all references to FNF are to Fidelity National Financial,
Inc. (formerly known as Fidelity National Title Group, Inc.), formerly a subsidiary of old FNF but
now a stand-alone company.
 (1) Basis of Presentation
  Lender Processing Services, Inc. Spin-off Transaction
    8




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 Principles of Consolidation
  Reporting Segments
  (2) Fair Value
 Fair Value Measurements and Disclosures
 
    
    Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical
assets or liabilities in active markets that the Company has the ability to access.
    
    Level 2 Inputs to the valuation methodology include:
 
    
    quoted prices for similar assets or liabilities in active markets;
    
    quoted prices for identical or similar assets or liabilities in inactive markets;
    
    inputs other than quoted prices that are observable for the asset or liability; and
    
    inputs that are derived principally from or corroborated by observable market data
by correlation or other means.
 
    
    Level 3 Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
   Fair ValueClassification
    
    Carrying Value
    
    Level 1
    
    Level 2
    
    Level 3
    
    TotalCash and cash equivalents
    
    Asset
    
    $
    64.8
    
    
    $
    64.8
    
    
    $
    
    
    
    $
    
    
    
    $
    64.8Long-term debt (note 6)
    
    Liability
    
    
    1,363.4
    
    
    
    381.6
    
    
    
    988.9
    
    
    
    
    
    
    
    1,370.5Interest rate swaps (note 6)
    
    Liability
    
    
    16.9
    
    
    
    
    
    
    
    16.9
    
    
    
    
    
    
    
    16.9
 (3) Related Party Transactions
  9




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  
    
    Agreements to provide title agency services. These agreements allow us to provide
services to existing customers through loan facilitation transactions, primarily with large
national lenders. The arrangement involves providing title agency services which result in
the issuance of title policies on behalf of title insurance underwriters owned by FNF and
its subsidiaries. Subject to certain early termination provisions for cause, each of these
agreements may be terminated upon five years prior written notice, which notice may not be
given until after the fifth anniversary of the effective date of each agreement, which
ranges from July 2004 through September 2006 (thus effectively resulting in a minimum ten
year term and a rolling one-year term thereafter). Under these agreements, we earn
commissions which, in the aggregate, are equal to at least 87% of the total title premium
from title policies that we place with subsidiaries of FNF. The commissions we earn are
subject to adjustment based on changes in FNFs provision for claim losses, but under no
circumstances are the commissions less than 87%. We also perform similar functions in
connection with trustee sale guarantees, a form of title insurance that subsidiaries of FNF
issue as part of the foreclosure process on a defaulted loan.
    
    Agreements to provide software development and services. Under these agreements, we are
paid for providing software development and services to FNF which consist of developing
software for use in the title operations of FNF.
    
    Arrangements to provide other data services.Under these arrangements, we are paid for
providing other data services to FNF, primarily consisting of data services required by the
FNF title insurance operations.
  Three months ended September 30,
    
    
    Nine months ended September 30,2009(1)
    
    
    2008
    
    
    2009(1)
    
    
    2008Title agency commissions
    
    $
    
    
    
    $
    56.8
    
    
    $
    74.8
    
    
    $
    123.6Software development revenue
    
    
    
    
    
    
    13.7
    
    
    
    13.4
    
    
    
    41.8Other data related services
    
    
    
    
    
    
    2.6
    
    
    
    3.4
    
    
    
    9.7Total revenues
    
    $
    
    
    
    $
    73.1
    
    
    $
    91.6
    
    
    $
    175.1
 
 (1)
    
    Does not include revenues received from FNF under these agreements subsequent to March 15,
2009, as FNF ceased to be a related party of the Company on that date. We continue to generate
revenues from contracts that were entered into while FNF was a related party. 
    
    Title plant access and title production services. Under these agreements, we obtain
access to FNFs title plants for real property located in various states, including access
to their online databases, physical access to title records, use of space, image system use,
and use of special software, as well as other title production services. For the title plant
access, we pay monthly fees (subject to certain minimum charges) based on the number of
title reports or products ordered and other services received. For the title production
services, we pay for services based on the number of properties searched, subject to certain
minimum use. The title plant access agreement has a term of 3 years beginning in November
2006 and is automatically renewable for successive 3 year terms unless either party gives 30
days prior written notice. The title production services agreement can be terminated by
either party upon 30 days prior written notice.
    
    Agreements to provide administrative corporate support services to and from FIS and from
FNF. Historically, FNF has provided to FIS certain administrative corporate support services
relating to general management, statutory accounting, claims administration, and other
administrative support services. Prior to the spin-off, as a part of FIS, we also received
these administrative corporate support services from FNF. In connection with the spin-off,
we entered into a separate agreement with FNF for the provision of certain of these
administrative corporate support services by FNF. In addition, prior to the spin-off, FIS
provided general management, accounting, treasury, payroll, human resources, internal audit,
and other corporate administrative support services to us. In connection with the spin-off,
we entered into corporate services agreements with FIS under which we receive from FIS, and
we provide to FIS, certain transitional corporate support services. The pricing for all of
these services, both from FNF and FIS, and to FIS, is on an at-cost basis. The term of the
corporate services agreements is two years, subject to early termination because the
services are no longer required by the party receiving the services or upon mutual agreement
of the parties and subject to extension in certain circumstances. Management believes the
methods used to allocate the amounts included in these financial statements for corporate
services are reasonable.
 10




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 
    
    Corporate aircraft use agreements. Historically the Company has had access to certain
corporate aircraft owned or leased by FNF and by FIS. Pursuant to an aircraft interchange
agreement, LPS is included as an additional permitted user of corporate aircraft leased by
FNF and FIS. FNF and FIS also continue to be permitted users of any aircraft leased by LPS.
LPS was also added as a party to the aircraft cost sharing agreement that was previously
signed between FNF and FIS. Under this agreement, the Company and FIS share the costs of one
of FNFs aircraft that is used by all of the entities. The cost for use of each aircraft
under the aircraft interchange agreement is calculated on the same basis and reflects the
costs attributable to the time the aircraft is in use by the user. The aircraft interchange
agreement is terminable by any party on 30 days prior notice. The costs under the aircraft
cost sharing agreement are shared equally among FNF, FIS and the Company, and the agreement
remains in effect so long as FNF has possession or use of the aircraft (or any replacement)
but may be terminated at any time with the consent of FNF, FIS and the Company.
    
    Real estate management, real estate lease and equipment lease agreements. In connection
with the spin-off and the transfer of the real property located at the Companys corporate
headquarters campus from FIS to LPS, the Company entered into new leases with FNF and FIS,
as tenants, as well as a new sublease with FNF, as sub landlord, for office space in the
building known as Building V, which is leased by FNF and is located on the Companys
corporate headquarters campus. The Company also entered into a new property management
agreement with FNF with respect to Building V. Included in the Companys expenses are
amounts paid to FNF for the lease of certain equipment and the sublease of office space in
Building V, together with furniture and furnishings. In addition, the Companys financials
include amounts paid by FNF and FIS for the lease of office space located at the Companys
corporate headquarters campus and property management services for FNF for Building V.
    
    Licensing, cost sharing, business processing and other agreements. These agreements
provide for the reimbursement of certain amounts from FNF and FIS related to various
licensing and cost sharing agreements, as well as the payment of certain amounts by the
Company to FNF or its subsidiaries in connection with our use of certain intellectual
property or other assets of or services by FNF.
  Three months ended September 30,
    
    
    Nine months ended September 30,2009(1)
    
    
    2008
    
    
    2009(1)
    
    
    2008Title plant information expense (2)
    
    $
    
    
    
    $
    1.9
    
    
    $
    4.1
    
    
    $
    6.6Corporate services (3)
    
    
    0.4
    
    
    
    3.6
    
    
    
    7.0
    
    
    
    31.2Licensing, leasing and cost sharing agreements (3)
    
    
    (0.7
    )
    
    
    (1.0
    )
    
    
    (2.6
    )
    
    
    (7.0
    )Total expenses
    
    $
    (0.3
    )
    
    $
    4.5
    
    
    $
    8.5
    
    
    $
    30.8
 
 (1)
    
    Does not include expense reimbursements paid to FNF under these agreements subsequent to
March 15, 2009, as FNF ceased to be a related party of the Company on that date. We continue
to incur expenses from contracts that were entered into while FNF was a related party.(2)
    
    Included in cost of revenues.(3)
    
    Included in selling, general, and administrative expenses.  11




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 Other related party transactions:
 FNRES Holdings, Inc. and Investment Property Exchange Services, Inc.
  (4) Net Earnings Per Share
 Earnings Per Share
 Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Amounts attributable to Lender Processing Services, Inc.:Earnings from continuing operations
    
    $
    75,542
    
    
    $
    49,716
    
    
    $
    201,332
    
    
    $
    170,356Discontinued operation
    
    
    
    
    
    
    1,565
    
    
    
    (504
    )
    
    
    6,203Net earnings
    
    $
    75,542
    
    
    $
    51,281
    
    
    $
    200,828
    
    
    $
    176,559Weighted average shares outstanding  basic (1)
    
    
    95,996
    
    
    
    94,667
    
    
    
    95,557
    
    
    
    95,551Plus: Common stock equivalent shares
    
    
    403
    
    
    
    556
    
    
    
    384
    
    
    
    412Weighted average shares outstanding  diluted (1)
    
    
    96,399
    
    
    
    95,223
    
    
    
    95,941
    
    
    
    95,963Net earnings per share  basic from continuing operations
    
    $
    0.79
    
    
    $
    0.52
    
    
    $
    2.11
    
    
    $
    1.78Net earnings per share  basic from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.07Net earnings per share  basic
    
    $
    0.79
    
    
    $
    0.54
    
    
    $
    2.11
    
    
    $
    1.85Net earnings per share  diluted from continuing operations
    
    $
    0.78
    
    
    $
    0.52
    
    
    $
    2.09
    
    
    $
    1.77Net earnings per share  diluted from discontinued operation
    
    
    
    
    
    
    0.02
    
    
    
    
    
    
    
    0.07Net earnings per share  diluted
    
    $
    0.78
    
    
    $
    0.54
    
    
    $
    2.09
    
    
    $
    1.84
 
 (1)
    
    Due to the nature and timing of the spin-off, the number of outstanding shares issued in the
initial formation and capitalization of the Company were the only shares outstanding prior to
the spin-off. As such, weighted average shares outstanding  basic for the three and nine
months ended September 30, 2008 was calculated assuming the shares issued by LPS on July 2,
2008 had been issued on January 1, 2008. Weighted average shares outstanding  diluted for the
three months ended September 30, 2008 was calculated assuming the number of dilutive common
stock equivalents converted into stock options and awards of our common stock on July 2, 2008
had been converted on January 1, 2008. Weighted average shares outstanding  diluted for the
nine months ended September 30, 2008 was calculated as the average of the weighted average
shares outstanding  diluted for the three months ended March 31, 2008, June 30, 2008 and
September 30, 2008.   12




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  (5) Acquisitions and Dispositions
  Tax Verification Bureau, Inc.
  FNRES Holdings, Inc.
  Presentation of Financial Statements
   13




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 McDash Analytics, LLC
  (6) Long-Term Debt
  September 30,
    
    
    December 31,2009
    
    
    2008Term A Loan, secured, interest payable at LIBOR plus 2.25% (2.50% at September 30, 2009),
quarterly principal amortization, maturing July 2013
    
    $
    490,000
    
    
    $
    665,000Term B Loan, secured, interest payable at LIBOR plus 2.50% (2.75% at September 30, 2009),
quarterly principal amortization, maturing July 2014
    
    
    503,625
    
    
    
    507,450Revolving Loan, secured, interest payable at LIBOR plus 2.25% (Eurocurrency Borrowings),
Fed-funds plus 2.25% (Swingline Borrowings) or Prime plus 1.25% (Base Rate Borrowings)
(2.50%, 2.32% or 4.50%, respectively, at September 30, 2009), maturing July 2013. Total of
$138.8 million unused (net of outstanding letters of credit) as of September 30, 2009
    
    
    
    
    
    
    Senior unsecured notes, issued at par, interest payable semiannually at 8.125%, due July 2016
    
    
    367,000
    
    
    
    375,000Other promissory notes with various interest rates and maturities
    
    
    2,767
    
    
    
    11,363,392
    
    
    
    1,547,451Less current portion
    
    
    (77,362
    )
    
    
    (145,101
    )Long-term debt, excluding current portion
    
    $
    1,286,030
    
    
    $
    1,402,350
  Principal Maturities of Debt
  Interest Rate Swaps
 Derivatives and Hedging
 14




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  Amount of Loss Recognized in OCE on DerivativesThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Derivatives in Cash Flow Hedging Relationships
    
    2009
    
    2008
    
    2009
    
    2008Interest rate swap contract
    
    $
    3.3
    
    
    $
    0.8
    
    
    $
    8.5
    
    
    $
    0.8
 Amount of Loss Reclassified fromAccumulated OCE into IncomeThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Location Of Loss Reclassified from Accumulated OCE into Income
    
    2009
    
    2008
    
    2009
    
    2008Interest expense
    
    $
    (5.0
    )
    
    $
    (0.6
    )
    
    $
    (14.9
    )
    
    $
    (0.6
    )
  (7) Income Taxes
 Income Taxes
 (8) Commitments and Contingencies
 Litigation
  
    
    These matters raise difficult and complicated factual and legal issues and are subject to
many uncertainties and complexities.
    
    In these matters, plaintiffs seek a variety of remedies including equitable relief in the
form of injunctive and other remedies and monetary relief in the form of compensatory
damages. In some cases, the monetary damages sought include punitive or treble damages. None
of the cases described below includes a specific statement as to the dollar amount of
damages demanded. Instead, each of the cases includes a demand in an amount to be proved at
trial.
    
    For the reasons specified above, it is not possible to make meaningful estimates of the
amount or range of loss that could result from these matters at this time. We review these
matters on an ongoing basis and follow the provisions of FASB ASC Topic 450, Contingencies,
when making accrual and disclosure decisions. When assessing reasonably possible and
probable outcomes, we base our decision on our assessment of the ultimate outcome following
all appeals.
    
    We intend to vigorously defend each of these matters, and we do not believe that the
ultimate disposition of these lawsuits will have a material adverse impact on our financial
position.
 National Title Insurance of New York, Inc. Litigation
  15




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  Regulatory Matters
  Off-Balance Sheet Arrangements
  Escrow Arrangements
  (9) Stock Option Plans
 Prior to spin-off
   16




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
 Post spin-off
     Options
  Weighted AverageNumber of Shares

    
    Exercise PriceOutstanding as of December 31, 2008
    
    
    6,761,115
    
    
    $
    31.16Granted during the first nine months of 2009
    
    
    1,934,400
    
    
    
    28.42Exercised during the first nine months of 2009 (1)
    
    
    (1,074,006
    )
    
    
    17.92Cancelled during the first nine months of 2009
    
    
    (598,819
    )
    
    
    35.29Outstanding as of September 30, 2009
    
    
    7,022,690
    
    
    $
    32.08
 
 (1)
    
    The total intrinsic value of stock options exercised during the nine months ended September
30, 2009 was $13.8 million.  17




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  Options Outstanding
    
    Options ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    Weighted
    
    Intrinsic
    
    
    
    
    
    Average
    
    Weighted
    
    IntrinsicRemaining
    
    Average
    
    Value at
    
    
    
    
    
    Remaining
    
    Average
    
    Value atRange of
    
    Number of
    
    Contractual
    
    Exercise
    
    September 30,
    
    Number of
    
    Contractual
    
    Exercise
    
    September 30,Exercise Prices
    
    Options
    
    Life
    
    Price
    
    2009
    
    Options
    
    Life
    
    Price
    
    2009(In thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    (In thousands)$
    0.00
    
    $
    13.67
    
    
    
    355,254
    
    
    
    4.62
    
    
    $
    12.04
    
    
    $
    7,554
    
    
    
    308,835
    
    
    
    4.49
    
    
    $
    11.79
    
    
    $
    6,64313.68
    
    
    20.00
    
    
    
    128,567
    
    
    
    2.87
    
    
    
    19.47
    
    
    
    1,777
    
    
    
    128,567
    
    
    
    2.87
    
    
    
    19.47
    
    
    
    1,77720.01
    
    
    25.00
    
    
    
    13,590
    
    
    
    2.13
    
    
    
    22.78
    
    
    
    143
    
    
    
    13,590
    
    
    
    2.13
    
    
    
    22.78
    
    
    
    14325.01
    
    
    29.02
    
    
    
    2,022,251
    
    
    
    6.39
    
    
    
    28.33
    
    
    
    10,051
    
    
    
    102,851
    
    
    
    6.39
    
    
    
    27.58
    
    
    
    58829.03
    
    
    33.30
    
    
    
    22,552
    
    
    
    5.35
    
    
    
    32.30
    
    
    
    23
    
    
    
    18,262
    
    
    
    5.44
    
    
    
    32.28
    
    
    
    1933.31
    
    
    35.00
    
    
    
    1,914,359
    
    
    
    5.27
    
    
    
    34.57
    
    
    
    
    
    
    
    856,764
    
    
    
    5.27
    
    
    
    34.56
    
    
    
    35.01
    
    
    36.00
    
    
    
    529,099
    
    
    
    5.23
    
    
    
    35.17
    
    
    
    
    
    
    
    305,066
    
    
    
    5.23
    
    
    
    35.17
    
    
    
    36.01
    
    
    37.00
    
    
    
    373,072
    
    
    
    4.21
    
    
    
    36.20
    
    
    
    
    
    
    
    344,854
    
    
    
    4.21
    
    
    
    36.17
    
    
    
    37.01
    
    
    38.00
    
    
    
    1,663,946
    
    
    
    5.22
    
    
    
    37.20
    
    
    
    
    
    
    
    666,266
    
    
    
    5.22
    
    
    
    37.20
    
    
    
    $
    0.00
    
    $
    38.00
    
    
    
    7,022,690
    
    
    
    5.44
    
    
    $
    32.08
    
    
    $
    19,548
    
    
    
    2,745,055
    
    
    
    4.95
    
    
    $
    31.87
    
    
    $
    9,170
  Restricted Stock
  (10) Segment Information
   Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    186,286
    
    
    $
    440,480
    
    
    $
    (7,339
    )
    
    $
    619,427Cost of revenues
    
    
    105,651
    
    
    
    311,230
    
    
    
    (7,768
    )
    
    
    409,113Gross profit
    
    
    80,635
    
    
    
    129,250
    
    
    
    429
    
    
    
    210,314Selling, general and administrative expenses
    
    
    18,256
    
    
    
    27,665
    
    
    
    20,750
    
    
    
    66,671Operating income
    
    $
    62,379
    
    
    $
    101,585
    
    
    $
    (20,321
    )
    
    $
    143,643Depreciation and amortization
    
    $
    17,595
    
    
    $
    5,295
    
    
    $
    2,154
    
    
    $
    25,044Balance sheet data:Total assets
    
    $
    1,156,535
    
    
    $
    807,616
    
    
    $
    205,540
    
    
    $
    2,169,691Goodwill
    
    $
    758,081
    
    
    $
    377,072
    
    
    $
    
    
    
    $
    1,135,153
 18




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)  Continued
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    138,964
    
    
    $
    329,473
    
    
    $
    (1,675
    )
    
    $
    466,762Cost of revenues
    
    
    73,980
    
    
    
    228,283
    
    
    
    (1,703
    )
    
    
    300,560Gross profit
    
    
    64,984
    
    
    
    101,190
    
    
    
    28
    
    
    
    166,202Selling, general and administrative expenses
    
    
    15,790
    
    
    
    26,487
    
    
    
    15,632
    
    
    
    57,909Operating income
    
    $
    49,194
    
    
    $
    74,703
    
    
    $
    (15,604
    )
    
    $
    108,293Depreciation and amortization
    
    $
    15,229
    
    
    $
    6,651
    
    
    $
    1,920
    
    
    $
    23,800Balance sheet data (including discontinued operation):Total assets
    
    $
    1,096,573
    
    
    $
    775,505
    
    
    $
    177,907
    
    
    $
    2,049,985Goodwill
    
    $
    697,226
    
    
    $
    389,380
    
    
    $
    
    
    
    $
    1,086,606
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    518,054
    
    
    $
    1,263,047
    
    
    $
    (18,686
    )
    
    $
    1,762,415Cost of revenues
    
    
    295,043
    
    
    
    891,515
    
    
    
    (18,729
    )
    
    
    1,167,829Gross profit
    
    
    223,011
    
    
    
    371,532
    
    
    
    43
    
    
    
    594,586Selling, general and administrative expenses
    
    
    52,146
    
    
    
    82,088
    
    
    
    69,046
    
    
    
    203,280Operating income
    
    $
    170,865
    
    
    $
    289,444
    
    
    $
    (69,003
    )
    
    $
    391,306Depreciation and amortization
    
    $
    51,411
    
    
    $
    15,029
    
    
    $
    6,178
    
    
    $
    72,618
  Technology,
    
    
    LoanData and
    
    
    Transaction
    
    
    CorporateAnalytics
    
    
    Services
    
    
    and Other
    
    
    TotalResults from continuing operations:Processing and services revenues
    
    $
    416,532
    
    
    $
    955,851
    
    
    $
    (8,714
    )
    
    $
    1,363,669Cost of revenues
    
    
    229,487
    
    
    
    661,789
    
    
    
    (8,866
    )
    
    
    882,410Gross profit
    
    
    187,045
    
    
    
    294,062
    
    
    
    152
    
    
    
    481,259Selling, general and administrative expenses
    
    
    49,519
    
    
    
    78,985
    
    
    
    43,073
    
    
    
    171,577Operating income
    
    $
    137,526
    
    
    $
    215,077
    
    
    $
    (42,921
    )
    
    $
    309,682Depreciation and amortization
    
    $
    45,215
    
    
    $
    18,104
    
    
    $
    5,014
    
    
    $
    68,333
 (11) Subsequent Events
 Subsequent Events
 NRC Rising Tide National Auction & REO Solutions, LLC
  19




---



##### Table of Contents



Except as otherwise indicated or unless the context otherwise requires, all references to
LPS, we, the Company, or the registrant are to Lender Processing Services, Inc., a Delaware
corporation that was incorporated in December 2007 as a wholly-owned subsidiary of FIS, and its
subsidiaries; all references to FIS, the former parent, or the holding company are to
Fidelity National Information Services, Inc., a Georgia corporation formerly known as Certegy Inc.,
and its subsidiaries, that owned all of LPSs shares until July 2, 2008; all references to former
FIS are to Fidelity National Information Services, Inc., a Delaware corporation, and its
subsidiaries, prior to the Certegy merger described below; all references to old FNF are to
Fidelity National Financial, Inc., a Delaware corporation that owned a majority of former FISs
shares through November 9, 2006; and all references to FNF are to Fidelity National Financial,
Inc. (formerly known as Fidelity National Title Group, Inc.), formerly a subsidiary of old FNF but
now a stand-alone company.
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview
   
    
    our mortgage processing services, which we conduct using our mortgage servicing platform
and our team of experienced support personnel based primarily at our Jacksonville, Florida
data center;
    
    our Desktop application, a workflow system that assists our customers in managing
business processes, which today is primarily used in connection with mortgage loan default
management, but which has broader applications;
    
    our other software and related service offerings, including our mortgage origination
software, our real estate closing and title insurance production software and our middleware
application, which provides collaborative network connectivity among mortgage industry
participants; and
 20




---



##### Table of Contents




    
    our data and analytics businesses, the most significant of which are our alternative
property valuations business, which provides a range of valuations other than traditional
appraisals, our aggregated property and loan data services, and our advanced analytic
services, which assist our customers in their loan marketing, loss mitigation and fraud
prevention efforts.
   
    
    settlement services, which consist of title agency services, in which we act as an agent
for title insurers, closing services, in which we assist in the closing of real estate
transactions, and lien recording and release services;
    
    appraisal services, which consist of traditional appraisal and appraisal management
services; and
    
    other origination services, which consist of flood zone information, which assists
lenders in determining whether a property is in a federally designated flood zone, and real
estate tax services, which provide lenders with information about the tax status of a
property.
  
    
    foreclosure management services, including access to a nationwide network of independent
attorneys, mandatory title searches, posting and publishing, and recording and other
services;
    
    property inspection and preservation services, designed to preserve the value of
properties securing defaulted loans; and
    
    asset management services, providing disposition services for our customers real estate
owned properties through a network of independent real estate brokers, attorneys and other
vendors to facilitate the transaction.
   Recent Trends and Developments
   21




---



##### Table of Contents



22




---



##### Table of Contents



Critical Accounting Policies
  Recent Accounting Pronouncements
  23




---



##### Table of Contents



Transactions with Related Parties
  Factors Affecting Comparability
  
    
    On July 2, 2008, FIS exchanged 100% of our debt obligations, which consisted of $1,210.0
million under bank credit facilities and senior notes in an aggregate principal amount of
$375.0 million, for a like amount of FISs existing term loans issued under its credit
agreement dated as of January 18, 2007. Additionally, on July 2, 2008, we borrowed $25.7
million under a revolving credit facility. Prior to July 2, 2008 we had an insignificant
amount of interest expense.
  24




---



##### Table of Contents



Comparisons of three months ended September 30, 2009 and 2008
  Consolidated Condensed Results of Operations  Unaudited
 Three months ended September 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    619.4
    
    
    $
    466.8
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    152.6
    
    
    
    32.7
    %Cost of revenues
    
    
    409.1
    
    
    
    300.6
    
    
    
    66.0
    %
    
    
    64.4
    %
    
    
    (108.5
    )
    
    
    (36.1
    )%Gross profit
    
    
    210.3
    
    
    
    166.2
    
    
    
    34.0
    %
    
    
    35.6
    %
    
    
    44.1
    
    
    
    26.5
    %Gross margin
    
    
    34.0
    %
    
    
    35.6
    %Selling, general and administrative expenses
    
    
    66.7
    
    
    
    57.9
    
    
    
    10.8
    %
    
    
    12.4
    %
    
    
    (8.8
    )
    
    
    (15.2
    )%Operating income
    
    
    143.6
    
    
    
    108.3
    
    
    
    23.2
    %
    
    
    23.2
    %
    
    
    35.3
    
    
    
    32.6
    %Operating margin
    
    
    23.2
    %
    
    
    23.2
    %Other income (expense)
    
    
    (21.1
    )
    
    
    (24.1
    )
    
    
    3.4
    %
    
    
    5.2
    %
    
    
    3.0
    
    
    
    12.4
    %Earnings from continuing operations before
income taxes and equity in losses of
unconsolidated entity
    
    
    122.5
    
    
    
    84.2
    
    
    
    19.8
    %
    
    
    18.0
    %
    
    
    38.3
    
    
    
    45.5
    %Provision for income taxes
    
    
    46.9
    
    
    
    32.7
    
    
    
    7.6
    %
    
    
    7.0
    %
    
    
    (14.2
    )
    
    
    (43.4
    )%Earnings from continuing operations before
equity in losses of unconsolidated entity,
discontinued operation and noncontrolling
minority interest
    
    
    75.6
    
    
    
    51.5
    
    
    
    12.2
    %
    
    
    11.0
    %
    
    
    24.1
    
    
    
    46.8
    %Equity in losses of unconsolidated entity,
discontinued operation and noncontrolling
minority interest
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    nm
    
    nm
    
    nm
    
    nmNet earnings attributable to Lender
Processing Services, Inc.
    
    $
    75.5
    
    
    $
    51.3
    
    
    
    12.2
    %
    
    
    11.0
    %
    
    $
    24.2
    
    
    
    47.2
    %Net earnings per share attributable to
Lender Processing Services, Inc.  diluted
    
    $
    0.78
    
    
    $
    0.54
 
 nm
    
    =    not meaningful Processing and Services Revenues
  Cost of Revenues
  Gross Profit
  25




---



##### Table of Contents



Selling General and Administrative Expenses
  Operating Income
  Other Income (Expense)
  Income Taxes
  Equity in Losses of Unconsolidated Entity, Discontinued Operation and
Noncontrolling Minority Interest
  Net Earnings and Net Earnings Per Share Attributable to LPS  Diluted
  Segment Results of Operations  Technology, Data and Analytics  Unaudited
 Three months ended September 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    186.3
    
    
    $
    139.0
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    47.3
    
    
    
    34.0
    %Cost of revenues
    
    
    105.6
    
    
    
    74.0
    
    
    
    56.7
    %
    
    
    53.2
    %
    
    
    (31.6
    )
    
    
    (42.7
    )%Gross profit
    
    
    80.7
    
    
    
    65.0
    
    
    
    43.3
    %
    
    
    46.8
    %
    
    
    15.7
    
    
    
    24.2
    %Gross margin
    
    
    43.3
    %
    
    
    46.8
    %Selling, general and administrative
expenses
    
    
    18.3
    
    
    
    15.8
    
    
    
    9.8
    %
    
    
    11.4
    %
    
    
    (2.5
    )
    
    
    (15.8
    )%Operating income
    
    $
    62.4
    
    
    $
    49.2
    
    
    
    33.5
    %
    
    
    35.4
    %
    
    $
    13.2
    
    
    
    26.8
    %Operating margin
    
    
    33.5
    %
    
    
    35.4
    %
 Processing and Services Revenues
  26




---



##### Table of Contents



Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Loan Transaction Services  Unaudited
 Three months ended September 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    440.5
    
    
    $
    329.5
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    111.0
    
    
    
    33.7
    %Cost of revenues
    
    
    311.2
    
    
    
    228.3
    
    
    
    70.6
    %
    
    
    69.3
    %
    
    
    (82.9
    )
    
    
    (36.3
    )%Gross profit
    
    
    129.3
    
    
    
    101.2
    
    
    
    29.4
    %
    
    
    30.7
    %
    
    
    28.1
    
    
    
    27.8
    %Gross margin
    
    
    29.4
    %
    
    
    30.7
    %Selling, general and administrative
expenses
    
    
    27.7
    
    
    
    26.5
    
    
    
    6.3
    %
    
    
    8.0
    %
    
    
    (1.2
    )
    
    
    (4.5
    )%Operating income
    
    $
    101.6
    
    
    $
    74.7
    
    
    
    23.1
    %
    
    
    22.7
    %
    
    $
    26.9
    
    
    
    36.0
    %Operating margin
    
    
    23.1
    %
    
    
    22.7
    %
 Processing and Services Revenues
  Cost of Revenues
  27




---



##### Table of Contents



Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Corporate and Other  Unaudited
  28




---



##### Table of Contents



Comparisons of nine months ended September 30, 2009 and 2008
  Consolidated Condensed Results of Operations  Unaudited
 Nine months ended September 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    1,762.4
    
    
    $
    1,363.7
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    398.7
    
    
    
    29.2.
    %Cost of revenues
    
    
    1,167.8
    
    
    
    882.4
    
    
    
    66.3
    %
    
    
    64.7
    %
    
    
    (285.4
    )
    
    
    (32.3
    )%Gross profit
    
    
    594.6
    
    
    
    481.3
    
    
    
    33.7
    %
    
    
    35.3
    %
    
    
    113.3
    
    
    
    23.5
    %Gross margin
    
    
    33.7
    %
    
    
    35.3
    %Selling, general and
administrative expenses
    
    
    203.3
    
    
    
    171.6
    
    
    
    11.5
    %
    
    
    12.6
    %
    
    
    (31.7
    )
    
    
    (18.5
    )%Operating income
    
    
    391.3
    
    
    
    309.7
    
    
    
    22.2
    %
    
    
    22.7
    %
    
    
    81.6
    
    
    
    26.3
    %Operating margin
    
    
    22.2
    %
    
    
    22.7
    %Other income (expense)
    
    
    (63.7
    )
    
    
    (23.3
    )
    
    
    3.6
    %
    
    
    1.7
    %
    
    
    (40.4
    )
    
    
    (173.4
    )%Earnings from continuing
operations before income taxes and
equity in losses of unconsolidated
entity
    
    
    327.6
    
    
    
    286.4
    
    
    
    18.6
    %
    
    
    21.0
    %
    
    
    41.2
    
    
    
    14.4
    %Provision for income taxes
    
    
    125.3
    
    
    
    111.1
    
    
    
    7.1
    %
    
    
    8.1
    %
    
    
    (14.2
    )
    
    
    (12.8
    )%Earnings from continuing
operations before equity in losses
of unconsolidated entity,
discontinued operation and
noncontrolling minority interest
    
    
    202.3
    
    
    
    175.3
    
    
    
    11.5
    %
    
    
    12.9
    %
    
    
    27.0
    
    
    
    15.4
    %Equity in losses of unconsolidated
entity, discontinued operation and
noncontrolling interest
    
    
    (1.5
    )
    
    
    1.3
    
    
    nm
    
    nm
    
    nm
    
    nmNet earnings attributable to
Lender Processing Services, Inc.
    
    $
    200.8
    
    
    $
    176.6
    
    
    
    11.4
    %
    
    
    13.0
    %
    
    $
    24.2
    
    
    
    13.7
    %Net earnings per share
attributable to Lender Processing
Services, Inc.  diluted
    
    $
    2.09
    
    
    $
    1.84
 
 nm
    
    =    not meaningful Processing and Services Revenues
  Cost of Revenues
  Gross Profit
  29




---



##### Table of Contents



Selling General and Administrative Expenses
  Operating Income
  Other Income (Expense)
  Income Taxes
  Equity in Losses of Unconsolidated Entity, Discontinued Operation and
Noncontrolling Minority Interest
  Net Earnings and Net Earnings Per Share Attributable to LPS  Diluted
  Segment Results of Operations  Technology, Data and Analytics  Unaudited
 Nine months ended September 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    518.1
    
    
    $
    416.6
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    101.5
    
    
    
    24.4
    %Cost of revenues
    
    
    295.0
    
    
    
    229.5
    
    
    
    56.9
    %
    
    
    55.1
    %
    
    
    (65.5
    )
    
    
    (28.5
    )%Gross profit
    
    
    223.1
    
    
    
    187.1
    
    
    
    43.1
    %
    
    
    44.9
    %
    
    
    36.0
    
    
    
    19.2
    %Gross margin
    
    
    43.1
    %
    
    
    44.9
    %Selling, general and administrative
expenses
    
    
    52.2
    
    
    
    49.5
    
    
    
    10.1
    %
    
    
    11.9
    %
    
    
    (2.7
    )
    
    
    (5.5
    )%Operating income
    
    $
    170.9
    
    
    $
    137.6
    
    
    
    33.0
    %
    
    
    33.0
    %
    
    $
    33.3
    
    
    
    24.2
    %Operating margin
    
    
    33.0
    %
    
    
    33.0
    %
 30




---



##### Table of Contents



Processing and Services Revenues
  Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Loan Transaction Services  Unaudited
 Nine months ended September 30,
    
    
    
    
    
    
    
    
    
    As a % of Revenue
    
    
    Variance 2009 vs. 2008(in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    $
    
    
    %Processing and services revenues
    
    $
    1,263.1
    
    
    $
    955.9
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    307.2
    
    
    
    32.1
    %Cost of revenues
    
    
    891.5
    
    
    
    661.8
    
    
    
    70.6
    %
    
    
    69.2
    %
    
    
    (229.7
    )
    
    
    (34.7
    )%Gross profit
    
    
    371.6
    
    
    
    294.1
    
    
    
    29.4
    %
    
    
    30.8
    %
    
    
    77.5
    
    
    
    26.4
    %Gross margin
    
    
    29.4
    %
    
    
    30.8
    %Selling, general and administrative
expenses
    
    
    82.1
    
    
    
    79.0
    
    
    
    6.5
    %
    
    
    8.3
    %
    
    
    (3.1
    )
    
    
    (3.9
    )%Operating income
    
    $
    289.5
    
    
    $
    215.1
    
    
    
    22.9
    %
    
    
    22.5
    %
    
    $
    74.4
    
    
    
    34.6
    %Operating margin
    
    
    22.9
    %
    
    
    22.5
    %
 Processing and Services Revenues
  31




---



##### Table of Contents



Cost of Revenues
  Gross Profit
  Selling General and Administrative Expenses
  Operating Income
  Segment Results of Operations  Corporate and Other  Unaudited
  Liquidity and Capital Resources
 Cash Requirements
    32




---



##### Table of Contents



Operating Activities
  Investing Activities
   Financing Activities
  Financing
   33




---



##### Table of Contents



34




---



##### Table of Contents



Interest Rate Swaps
  Contractual Obligations
  Off-Balance Sheet Arrangements
  Escrow Arrangements
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
    
 Item 4.
    
    Controls and Procedures.
  35




---



##### Table of Contents



Part II: OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
 Litigation
  
    
    These matters raise difficult and complicated factual and legal issues and are subject to
many uncertainties and complexities.
 
    
    In these matters, plaintiffs seek a variety of remedies including equitable relief in the
form of injunctive and other remedies and monetary relief in the form of compensatory
damages. In some cases, the monetary damages sought include punitive or treble damages. None
of the cases described below includes a specific statement as to the dollar amount of
damages demanded. Instead, each of the cases includes a demand in an amount to be proved at
trial.
 
    
    For the reasons specified above, it is not possible to make meaningful estimates of the
amount or range of loss that could result from these matters at this time. We review these
matters on an ongoing basis and follow the provisions of FASB ASC Topic 450, Contingencies,
when making accrual and disclosure decisions. When assessing reasonably possible and
probable outcomes, we base our decision on our assessment of the ultimate outcome following
all appeals.
 
    
    We intend to vigorously defend each of these matters, and we do not believe that the
ultimate disposition of these lawsuits will have a material adverse impact on our financial
position.
 National Title Insurance of New York, Inc. Litigation
 Barton v. National Title Insurance of New York, Inc. et
al. Gentilcore v. National Title Insurance of New York, Inc. et al. Martinez v. National Title Insurance of
New York, Inc. et al. Swick v. National Title Insurance of New York, Inc. et al. Davis v. National Title Insurance
of New York, Inc. et al. Pepe v. National Title Insurance of New York, Inc. et al. Kornbluth v.
National Title Insurance of New York, Inc. et al. Lamb v. National Title Insurance of New York, Inc. et
al. Blackwell
v. National Title Insurance of New York, Inc. et al. Magana v. National Title Insurance of New York,
Inc. et al. Moynihan v. National Title Insurance of New York, Inc. et al. Romero v. National Title Insurance
of New York, Inc. et al. Doolittle, Susan v. National Insurance of New York, Inc. et al.
 36




---



##### Table of Contents



Regulatory Matters
  
 Item 1A.
    
    Risk Factors.
 Efforts by the government, financial institutions and other parties to address the troubled
mortgage market and the current economic and financial environment could affect us.
    37




---



##### Table of Contents



Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
   Total Number of
    
    Approximate Dollar Value (inTotal Number of
    
    Average Price
    
    Shares Purchased as Part
    
    millions) of Shares that May Yet BePeriod
    
    Shares Purchased
    
    Paid per Share
    
    of Publicly Announced Plans
    
    Purchased Under the Plans (1)July 1 to July 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    75.0August 1 to August 31, 2009
    
    
    300,430
    
    
    $
    32.88
    
    
    
    300,430
    
    
    $
    56.9
    (2)September 1 to September 30, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    56.9
    (2)Total
    
    
    300,430
    
    
    
    
    
    
    
    300,430
 
 (1)
    
    As of the last day of the respective month.(2)
    
    Amount also reflects the repurchase of approximately $8.0 million face value of our senior notes
for $8.2 million in August. 
 Item 6.
    
    Exhibits
  31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification by Chief Executive Officer of Periodic Financial Reports pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification by Chief Financial Officer of Periodic Financial Reports pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
 38




---



##### Table of Contents



SIGNATURES
  Date: November 16, 2009
    Lender Processing Services, Inc.By:
    /s/ FRANCIS K. CHANFrancis K. ChanExecutive Vice President and Chief Financial Officer 39




---



##### Table of Contents



LENDER PROCESSING SERVICES, INC.
FORM 10-Q
INDEX TO EXHIBITS
  ExhibitNo.
    
    Description31.1
    
    Certification of Jeffrey S. Carbiener, Chief Executive Officer of Lender Processing
Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Francis K. Chan, Chief Financial Officer of Lender Processing
Services, Inc., pursuant to rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Jeffrey S. Carbiener, Chief Executive Officer of Lender Processing
Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Francis K. Chan, Chief Financial Officer of Lender Processing
Services, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 40